CMS Announced PECOS Activation for January 6, 2014

The Centers for Medicare & Medicaid Services (CMS) announced the full implementation of the Provider Enrollment, Chain and Ownership System (PECOS) edits onordering/referring providers in Medicare Part B, DME, and Part A home health agency (HHA) claims. CMS will turn on the Phase 2 denial edits beginning January 6, 2014. This means that Medicare will deny claims for services or supplies that require an ordering/referring provider to be identified - and that provider is not identified, is not in Medicare's enrollment records, or is not of a specialty type that may order/refer the service/item being billed.

This will be the second attempt by CMS to implement the PECOS edits. CMS issued a Special Edition MLN Matters® Articleon March 1, 2013, that announced the full implementation of the PECOS edits effective May 1, 2013, however, due to technical issues delayed the implementation.

This announcement reiterates the rational for the requirement and CMS’ implementation policy for ensuring that only physicians who are eligible to order and refer home health services are reported on claims with a their associated national provider identifier (NPI). The following is an excerpt from the MLN Matters®:

“The Affordable Care Act, Section 6405, “Physicians Who Order Items or Services are required to be Medicare Enrolled Physicians or Eligible Professionals,” requires physicians or other eligible professionals to be enrolled in the Medicare Program to order or refer items or services for Medicare beneficiaries. Some physicians or other eligible professionals do not and will not send claims to a Medicare contractor for the services they furnish and therefore may not be enrolled in the Medicare program. Also, effective January 1, 1992, a physician or supplier that bills Medicare for a service or item must show the name and unique identifier of the attending physician on the claim if that service or item was the result of an order or referral. Effective May 23, 2008, the unique identifier was determined to be the NPI. The Centers for Medicare & Medicaid Services (CMS) has implemented edits on ordering and referring providers when they are required to be identified in Part B clinical laboratory and imaging, DME, and Part A HHA claims from Medicare providers or suppliers who furnished items or services as a result of orders or referrals.

Below are examples of some of these types of claims:

• Claims from clinical laboratories for ordered tests;
• Claims from imaging centers for ordered imaging procedures;
• Claims from suppliers of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) for ordered DMEPOS; and
• Claims from Part A Home Health Agencies (HHA).

Only physicians and certain types of non-physician practitioners are eligible to order or refer items or services for Medicare beneficiaries. They are as follows:

• Physicians (doctor of medicine or osteopathy, doctor of dental medicine, doctor of dental surgery, doctor of podiatric medicine, doctor of optometry, optometrists may only order and refer DMEPOS products/services and laboratory and X-Ray services payable under Medicare Part B.)
• Physician Assistants,
• Clinical Nurse Specialists,
• Nurse Practitioners,
• Clinical Psychologists,
• Interns, Residents, and Fellows,
• Certified Nurse Midwives, and
• Clinical Social Workers.

Physicians and others who are eligible to order and refer items or services need to establish their Medicare enrollment record and must be of a specialty that is eligible to order and refer. Physicians and others who are eligible to order and refer items or services need to establish their Medicare enrollment record with a valid NPI and must be of a specialty that is eligible to order and refer. If the ordering/referring provider is listed on the claim, the edits will verify that the provider is enrolled in Medicare. The edits will compare the first four letters of the last name. When submitting the CMS-1500 or the CMS-1450, please only include the first and last name as it appears on the ordering and referring file found here on the CMS website.

CMS began Phase 1 of the PECOS edits on October 5, 2009, which alerts the billing provider, through informational messages on remittance advices, when the identification of the ordering/referring provider is missing, incomplete, or invalid, or that the ordering/referring provider is not eligible to order or refer.

Effective January 6, 2014, Phase 2 of the PECOS edits will begin. CMS will turn on the edits to deny Part B clinical laboratory and imaging, DME, and Part A HHA claims that fail the ordering/referring provider edits.

CMS has clarified, in accord with Change Request 8356- Handling of Incomplete or Invalid Claims once the Phase 2 Ordering and Referring Edits are Implemented, that claims submitted identifying an ordering/referring provider and the required matching NPI is missing will be rejected.

Additionally, CMS has reversed their previous instructions to clarifythat claims be denied because they failed the ordering/referring edit will not expose a Medicare beneficiary to liability. Therefore, an Advance Beneficiary Notice is not appropriate in this situation.

The National Association for Home Care & Hospice will continue to report updated information related to PECOS edit implementation as it becomes available.